North Carolina 14 Business Entity Statuses You Need to Know
1. Current - Active
The entity is current on all required documents and active on the NC Business Registry. This status indicates a business is compliant and operational, suggesting a lower risk profile for lenders and potentially better creditworthiness.
2. Multiple
An entity which is administratively dissolved or administratively revoked and suspended by the Department of Revenue or a licensing board. The word "multiple" indicates there is more than one applicable status. This status suggests significant compliance issues, potentially indicating higher risk for lenders and possible operational instability.
3. Suspended
The North Carolina Department of Revenue notified the NC Department of the Secretary of State to suspend the entity. No documents can be filed on an entity which is suspended by the Department of Revenue, with the exception of a Statement of Resignation of Registered Agent. This status indicates serious tax compliance issues, signaling high risk for lenders and potential operational challenges.
4. Dissolved
An entity filed Articles of Dissolution to close their business. They are not active on the NC Business Registry. This status indicates the business has voluntarily ceased operations, presenting significant risk for lenders and suggesting no ongoing business activity.
5. In Process
This status is used when a submission for a creation filing is received and the document is in process of being examined and filed. While this status indicates a new business formation, lenders should exercise caution as the entity is not yet fully established and may lack operational history.
6. Cancelled
An entity that filed a Certificate of Cancellation of its Registration of Limited Partnership, Limited Liability Partnership, or Limited Liability Limited Partnership. The entity s is no longer active on the NC Business Registry. This status signifies the business has voluntarily terminated its registration, presenting high risk for lenders and indicating cessation of operations.
7. Admin. Dissolved
The entity progressed through the administrative dissolution process without filing the required filings and a Certificate of Administrative Dissolution was issued. No documents, except changes to the Registered Agent can be filed on an administratively dissolved company. This status suggests severe compliance issues, indicating high risk for lenders and potential operational instability.
8. Revoked
The entity progressed through the administrative revocation process without filing the required filings and a Certificate of Administrative Revocation was issued. This status indicates significant non-compliance, suggesting high risk for lenders and potential operational and legal challenges.
9. Doc Tracking Canceled
This status indicates that the processing or tracking of a document, often within a governmental or organizational system, has been halted and effectively canceled. While this status may not directly impact the business's operations, it could signal administrative issues that lenders should investigate further.
10. Withdrawn
When a foreign entity doesn't want to do business in North Carolina and withdraws their Certificate of Authority to do business in North Carolina. This status indicates the business has voluntarily ceased operations in the state, potentially impacting its market presence and financial stability.
11. PA Suspended
This status is used when a licensing board under N.C.G.S. Chapter 55B has suspended a business entity of record. This status suggests professional licensing issues, which could significantly impact the business's ability to operate and generate revenue, presenting increased risk for lenders.
12. Withdrawn by Merger
This status is used when a foreign entity registered with the NC Department of the Secretary of State, merges with another foreign entity or has converted to another foreign entity and the registration is no longer needed in North Carolina. This status indicates a significant change in business structure, which may impact the entity's financial stability and creditworthiness, requiring careful assessment by lenders.
13. Auto Dissolve
The General Assembly passed a bill to automatically dissolve entities for specific reasons. This status suggests the business has been forcibly dissolved due to legislative action, indicating high risk for lenders and likely cessation of operations.
14. Failure to Pay Fee
This status is used by the Budget Office when a creation document is submitted and there is an issue with the filing fee, such as non-sufficient funds or a closed account. This status may indicate financial difficulties or administrative oversights, potentially signaling increased risk for lenders and requiring further investigation into the business's financial management practices.
Why Business Statuses Matter?
A business's status reveals important information about its operational health and legal standing, which are critical factors for lenders to assess when evaluating lending risks.
- Risk assessment: A company's good standing status provides lenders insight into the business's compliance and financial health. Lenders view companies not in good standing as higher risk, which can impact loan approval or terms.
- Loan requirements: Many lenders require a Certificate of Good Standing as part of the loan application process. Not being able to provide this can delay or derail financing.
- Legal protections: Maintaining good standing preserves the limited liability protection that business entities like LLCs and corporations provide. This reduces risk for both the business and potential lenders.
- Credibility: Good standing status signals that a business is responsibly managed and compliant with state regulations. This enhances credibility with lenders.
- Expansion capabilities: Companies need to be in good standing to expand into new states. This is important for lenders evaluating a company's growth potential.
Implications for Alternative Lenders
Understanding these statuses is crucial for:
- Risk Assessment: Each status provides insights into the business's stability and compliance.
- Due Diligence: Knowing what each status means allows for more targeted questions and investigations.
- Portfolio Management: Regularly checking the status of businesses in your portfolio can help you proactively manage risk.
- Competitive Advantage: This knowledge allows you to make quicker, more informed decisions than less-informed competitors.
By mastering North Carolina business statuses, you're equipping yourself with a powerful tool for risk assessment and decision-making. Remember, while these statuses provide valuable insights, they should be considered alongside other factors in your lending criteria.
Disclaimer: This guide is for informational purposes only and should not be considered legal advice. Always consult with legal professionals for specific situations.
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